
Jifornia 

ional 

lity 




UNIVERSITY 

OF CALIFORNIA 

LOS ANGELES 



SCHOOL OF LAW 
LIBRARY 




SHALL THE PEOPLE OR THE 
CORPORATIONS RULE? 



THE PARAMOUNT ISSUE 



SPEECH 

OF 

JAMES V. COFFEY 

J Hi 

Chairman of San Francisco Delegation 

1876 and 1876 



MARCH 7, 1878 



ON THE 



RAILROAD COMMISSION BILLS 



Twenty-second Session Assembly of the Legislature 

of California 



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Shall the People or the Corporations Rule? 
THE PARAMOUNT ISSUE 



THE RAILROAD DEBATE. 

(Semi-weekly Record Union, March 12, 1878.) 

On Tuesday the Assembly reached the general discus- 
sion of all the railroad bills, which continued through 
Thursday and Friday, the Hart Bill (Assembly Bill 541) 
being on its passage, and the Commissioners' bills (As- 
sembly Bills 225, 226 and 227) being on their engross- 
ment. Speeches were made during the consideration of 
the bills on those days: 

Mr. Coffey's Speech. 

MR. COFFEY — The rapidly increasing power and in- 
fluence of corporations has been for years a subject of 
solicitude to the thoughtful. 

Particularly have those great lines of railroad, formed 
by consolidation or combination, excited the apprehen- 
sions of the patriot, who looks to a provision of defense 
for the liberties and purity of government in the future. 

The experience of the country has impressed the lesson 
that competition may be robbed of its prerogative, while 
monopoly — the evil genius of trade — seizes hold of the 
people and plunders their pockets. 

The railroad era in this country has hardly dawned. 
We see nothing of enterprise in this department in com- 
parison with what we shall see. 

And now, in the infancy of this great system, let the 
people look to it that they are not mastered or corrupted 
by its ambitious power. 

Already it has aspired to control the Legislature and 
the Courts, and even Congress has bowed to its mandates ; 
while the dictation of a President of the United States is 
in no wise out of the range of its possibilities. Such a 



power having- at its command such vast influences for 
controlling the action of men, and such extended abilities 
for personal purchase and legislative corruption, rises be- 
fore our eyes this day as the overtowering danger of the 
times. By the simple process of fixing the rates of travel 
and transportation a whole State and people, out of whose 
sweat and toil these great lines were constructed, may 
be made hewers of wood and drawers of water for distant 
wealthy centers, while Courts and Legislatures may be 
so manipulated as to perpetuate the wrong. 

Discrimination in rates against large sections destroys 
all existing manufacturing enterprises within their limits, 
while the creation of new ones is prevented by the knowl- 
edge of the risks to which the condition of the railroad 
system will expose them. Now the great question is, 
how can these corporate monsters be chained down to 
their proper sphere of service to the people? If this 
Legislature will rise to the height of its great responsi- 
bility, the matter of providing laws by which these grasp- 
ing corporations will be shorn of their influence for evil 
and confined to the legitimate purpose of their institution 
— namely, the accommodation and service of the people — 
it will then have accomplished the primary purpose for 
which it is here assembled. 

The majority in this body, indeed — I may say nearly 
all of this body — were elected upon the understanding 
that some such bill as that now under consideration — "the 
Commissioners' Bill" — should be passed. 

If the recent elections in this State demonstrated any 
one thing, it was that the popular distrust of the ascen- 
dency of corporate influence in this country is universal 
and deeply rooted. The people are, perhaps, slow to learn 
what it behooves them most to know; but once having 
attained the requisite knowledge, they are as quick to 
act in their own behalf. They have for years submitted 
to the encroachments of corporations upon their preroga- 
tives, blindly deluded by the notion that without the aid 
of the monopolies it was impossible to advance their own 



interests. But now that they have seen by experience 
what their foresight was insufficient to reveal — that they 
are growing - poorer while the corporations are becoming 
enormously richer — they have come to a determination 
that it is time that an adjustment were made and their 
complete subjugation averted. They have reached this 
state of mind at by no means too early a stage of the 
question. Their present attitude deferred a while longer, 
they would probably find themselves completely at the 
mercy of their antagonists. And it is not now a safe 
proposition that they will not be overcome — for while 
they are by their enemy in danger of being lulled into 
conceit of their own power and security, that enemy will 
remain eternally vigilant and alert. 

The insidious approaches of monopoly to its present 
point of supremacy shows how necessary it is to remit 
no endeavor and to relax no energy to bring it into sub- 
ordination to the popular will. 

From an infinitely small beginning, with nothing gained 
except from the grace and credulity of the people, the 
corporations of the United States have grown to a height 
and bulk and arrogance that baffle belief. It is almost 
incredible how monstrous are these creations of our own 
favor, when we come to examine their history and survey 
their progress, and beside them perceive how their crea- 
tors have diminished in size and importance. In this free 
land, in the last half of the most enlightened and self- 
sufficient century of the world, we have cultivated a 
growth that centuries ago in monarchical countries was 
more dreaded than absolute kings. 

The people of England, through their parliament, ex- 
hausted device and ingenuity in legislation to break the 
power of incorporate bodies, to rid themselves of a tyranny 
they considered quite as insupportable as any that could 
be exercised by the individual wearing a crown, indeed 
more so, because that individual was mortal and deposa- 
ble, while the corporation was in its nature without dura- 
tion ; and, once established, it might become next to im- 



4 

possible to bring it under popular control ; while we in 
the United States have, it may be said, exhausted device 
and ingenuity to create, foster, protect and extend in 
every direction the power, immunities and privileges of 
corporations. Our English ancestors placed restrictions 
upon the exercise of corporate functions, bound and 
hedged them in on all sides, subjecting them to the 
mandate of the law and the convenience of the people, 
while we have pursued an almost precisely opposite plan, 
fettering the people and giving the most unlimited license 
to corporations. Created for the purpose and under the 
pretense of more rapidly stimulating production, encour- 
aging development, and fostering commerce, they have 
succeeded in partly stifling the first, discouraging the 
second, and almost paralyzing the last. 

Brought into being to answer the demands for im- 
proved facilities of intercourse between distant points, 
and the settlement of immense tracts of fertile land in 
the new western country, that production might be ren- 
dered more adequate to consumption, and that popula- 
tion and wealth might be more equally distributed, the 
railway companies have by exorbitant freight tariffs — by 
unjust discriminations against localities — by partial and 
excessive rates of fare — by tyrannous regulations control- 
ling passenger transit — by cliques and combinations to 
extort and purchase legislation favorable to themselves 
and procure adjudication to support their pretensions — 
by and through these means, they have succeeded in 
amassing and centralizing wealth in the hands of a few — 
in impoverishing particularly the hardest working and 
most deserving class — the agricultural element of our pop- 
ulation — until at last, when submission is no longer possi- 
ble, when the farmers see their fields yielding harvests 
unexampled in quality and quantity, yet incapable of 
profit, by reason of the difficulty of reaching the market 
owing to the exactions of the transportation companies, 
an endeavor is made to shorten the growth of this mon- 
ster that has risen to a stature greater than the Govern- 



ment itself, and stronger than the law — but, happily, not 
yet quite beyond the reach of the people. 

The tide is now beginning to turn. The enthusiasm 
that gave these giants birth is now yielding to a sober 
judgment, and the result shall be. if we obey the will of 
the people, as expressed in our presence here, the cor- 
porations, Government, and communities will resume 
their normal relations, where the two first will be sub- 
servient to the will of the last, as expressed in the Con- 
stitution and the laws made in pursuance thereof. 

If there be any meaning in the late elections, in this 
State, if they indicate any one truth, it is that the people 
rule and will brook no master but themselves; that they 
are bound to retain and transmit to posterity the freedom 
inherited from their forefathers; that no corporation — 
soulless, yet immortal — shall either virtually or actually 
dictate the policy, shape the legislation, or inspire the 
judicial expression of the United States or of any State 
or Territory. In short, there is a fixed purpose that 
hereafter all persons, natural and artificial, shall be 
entirely equal before the law. 

The paramount issue of the last campaign that gave 
the Democratic party supremacy in this State was the 
question now before this body — an issue absorbing all 
others and reaching into every interest in this State. 
There is no man, howsoever humble or poor in this world's 
goods, who can be free from concern upon this question 
of the ascendency of the railway companies. Every man 
hitherto in this land has prided himself upon the posses- 
sion of personal independence, upon sovereignty over him- 
self, upon perfect liberty to strike out for himself a path- 
way to fortune, unhampered by any artificial restrictions 
in favor of his neighbor. No man ought to say, no man 
can truthfully and intelligently say — "It matters not to 
me whether these railroad people succeed or fail in their 
attempt to wrest the law and Government to their own 
uses." It does matter to every individual — for all are 
alike concerned in the purity of the foundations of law 



and justice — all are alike deeply, immeasurably affected 
by the threatened dominancy of the corporations. Every 
man in this land is interested in the struggle now going 
on between the people on the one side and the corpo- 
rations on the other. It is not, as our opponents would 
have people believe, a contest against railroads, for no 
one is so foolish as to depreciate their value, but it is a 
contest against the audacious usurpations, the monstrous 
tyranny, the unparalleled robbery of the corporations. 

The principle involved in this contest is not a narrow 
or a new one. It is as ancient as civilization, as broad 
as freedom's soil, as sacred as life itself. It is in another 
form the principle that gave birth to the American 
Revolution, and the principle that, if now overborne, will 
give birth to another revolution. The tyranny with which 
we are threatened to-day is greater than that which our 
forefathers rose against and resisted and overcame after 
a bloody war of seven years. If we do not overcome it 
now, in a very short time the masses of the people will 
be reduced to the condition practically of serfs. It is 
idle to say: This cannot be — it is mere declamation. 
It is, unfortunately, too true already. The plenitude of 
power possessed by the railroad companies, often obtained 
by the grossest means, is brought to bear upon all inter- 
ests, and thousands of honest men in business are para- 
lyzed into political inaction by the fear of the Monarchs 
of the Rail. It is worth all a man's property, wherever 
he is at all dependent upon the railroads, to open his 
mouth against the exactions and encroachments of the 
corporations. And yet all that these magnates have has 
come from the diminished wealth of the people, who alone 
are competent to control this giant of their own creation. 
They are competent to do so now ; but who shall speak 
of their competency a decade hence? 

The corporations interested adversely to this bill have 
strenuously denied the right of the Legislature of this 
State to interfere with the conduct of their business, and 
have brought all available talent to bear in support of 



their position — so we have been deluged with a flood of 
legal literature enforcing the non-interference theory, deny- 
ing the right of legislative action, contesting the power 
of this body to interfere in any manner with the condi- 
tions upon which these corporations exercise the fran- 
chise granted them by the State. 

Notwithstanding all the learning and sophistry brought 
to bear in support of the contrary position, it has been 
demonstrated and decided finally by the Court of last 
resort that the right of the State Legislature to regulate 
the rates of travel and transportation upon railroads is 
incontestable and inalienable. All the learned arguments 
and lengthy dissertations of hired advocates have not been 
sufficient to shake the popular conviction of such legis- 
lative prerogative. The corporation interested, being or- 
ganized under and by virtue of the laws of the State of 
California, is subject to the conditional reservation of 
the State's right to alter from time to time or repeal 
the charter of incorporation. Within the limits of the 
State of California there cannot be any serious doubt of 
the right of the Legislature to regulate the charges for 
transportation of merchandise and passengers over the 
railroads of the Central Pacific Company, or of any road 
that begins and ends within the boundaries of the State. 
Notwithstanding that that company may possess National 
endowments, it is in its local traffic exclusively subject 
to the jurisdiction of the State. A gift from the United 
States cannot oust the State of California from its right- 
ful jurisdiction. Of course the railway company denies 
this proposition ; but it shifts its ground as occasion may 
require. When it seems necessary to elude Federal juris- 
diction it is as apt to deny it and insist upon State sov- 
ereignty as it is to deny the latter and assert the former 
when the necessities of the situation demand such change 
of base. The railway company is certainly subject to one 
or the other, and the balance of legal opinion and judicial 
decision places this road within the province and subjec- 
tion of State legislation. 



8 

It is claimed that the State has no more right to inter- 
fere with the business of a corporation than with the busi- 
ness of an individual, but this is an obvious fallacy. 

The railway business is of necessity a monopoly, 
practically excluding competition and demanding for 
popular protection some degree of legislative control. In 
the case of a railroad corporation, which controls the 
traffic of a State, which people must use, having no alter- 
native, an entirely different rule must obtain from what 
governs individual enterprises. 

While it is undeniably true in principle, and is, indeed, 
a fundamental maxim of Democracy — that "Government 
shall not interfere in individual affairs," and while this 
applies to artificial no less than to natural bodies, there 
is this qualification of the doctrine, that, where there is 
a corporation created by the Legislature for public pur- 
poses, to subserve the interests of the community, it par- 
takes of such a character as to exclude it from the opera- 
tion of the non-intervention maxim. This being true, as 
a general proposition, how much more is it true when 
the right is expressly reserved, as in this State, by the 
Constitution to interfere. Every corporation is organized 
and operates subject to that provision. If it were other- 
wise we should have a power within the State, created 
by the State, superior to the State. This is a monstrous 
doctrine, repugnant to the first principles of reason, which 
forbid that the mere creature of the law can be superior 
in power and beyond the control of its creator. 

No Legislature can surrender any portion of the peo- 
ple's sovereignty or right of mastery to a creature of its 
own handiwork. So much has been said upon this subject 
that it seems to me unnecessary to dwell further upon it. 
The general principles bearing upon the State's control 
of railway corporations, and the details of the application 
of those principles in the present case have been so fully 
considered that further discussion would seem to be use- 
less. It is enough to say, that so far as the popular side 
of this question is concerned, it is no longer open to dis- 



cussion. The people have decided that the State has a 
right to interfere; their decision has placed in this house 
a majority committed to the passage of some such law 
as the one now under consideration (the bill prepared by 
the Commission and reported by the Assembly Committee 
on Corporations). It may not be a perfect law; it is too 
much to expect that it can be so; but it is a long step 
in the right direction, and must be taken now or never. 
The dominant party in this State does not favor oppressive 
legislation against railroad companies; it is not intended 
to work a hardship upon them ; but the right of legislative 
power over these corporations must be asserted and main- 
tained. The railroads have used the power of the State 
to advance their interests and enrich themselves, and 
have used the wealth and advantage thereby gained to 
bring under subjection to them the State Government. 
Their conduct had been most overbearing and tyrannical 
until the people were stirred up to such a sense of their 
danger that the railroad was forced into the attitude of 
a suppliant, and made to recognize the fact that it was 
the servant, not the master, of the people and the State. 
The assumption that the railroad corporations possess 
absolute rights of property has, in my judgment, been 
overcome, and it is here where the whole argument 
against Governmental interference fails. The railway 
companies have only qualified property rights, subject in 
their exercise by express limitation to the regulation of 
the Legislature, which is by the Constitution of the State 
(article 4, section 31) invested with the power to alter or 
repeal corporate charters. In the first Railroad Incor- 
poration Act they exercised the right of regulating rates 
of transportation according to what was then considered 
a fair rule in this part of the country. The Legislature 
certainly did not exhaust its powers in that Act, and if 
it had the power at that time, it still possess it. This 
point is incontrovertible, and the argument that the exer- 
cise of this reserved power for the reduction of rates to 
a reasonable standard, is a breach of faith — "an act of 



10 

repudiation" towards the foreign bondholders — avails noth- 
ing; for it behooves them to search the title of the 
security in which they invest, and it is not at all too 
much to assume that they loaned their money with knowl- 
edge. At any rate, they are legally chargeable with such 
knowledge, and have no right to complain against the 
State of the depreciation of railroad bonds, which is 
due, after all, not to the action of the State, but to the 
gross extortions and exactions of the railway companies, 
which have set in motion the powers of the State. 

Railway property in this country has but few similari- 
ties with other property. The railroad company is neces- 
sarily a monopoly, with privileges the gift of the State, 
with endowments from the people of the municipalities 
and counties, and large subsidies from the General Gov- 
ernment. It cannot be considered wholly as a public in- 
stitution, nor entirely as a private concern. It partakes 
of the character of both, and must be treated according 
to the grave necessities of the community in either cate- 
gory. To permit it to assume and exert unrestricted 
powers in the exercise of its public franchise, would be to 
place the people entirely at its mercy and to endue it 
with a monstrous capacity erecting it above the State. 

[Mr. Coffey here alluded to the duty of Democrats and 
read their party platform.] 

The right and expediency of such legislation as is pro- 
posed in the Commissioners' Bill have been demonstrated. 
This being so, there can be no excuse for further delay in 
this matter. I would not do these corporations injustice, 
but my democracy compels me to assert the supremacy of 
the State, for the benefit of the people, over every mo- 
nopoly operating within its limits, and to regard a party 
platform not as a good thing to "step off from,'' or a 
trap to catch votes, but as something to be sacredly 
observed in all its requirements, express and implied. It 
is time that the abandonment of the essential Democratic 
doctrines should be made unprofitable to those who have 



11 

practiced it, and that the people prove to them that it 
is a game in politics that no man can play successfully 
more than once. The monopolies will give the people 
the platform provided the people will let them have the 
candidate. 1 do not propose now or hereafter to aid them 
in thus deluding and cheating the people, nor do I believe 
that any party success thus gained can be worth anything. 
In this State there is no question of superior import- 
ance to this one of corporate aggression and ascendancy. 
The presence here of the Chinese, crowding our white 
workingmen and boys to the wall, and putting to them 
the desperate alternative of starvation or crime, is largely 
attributable to the corporations which, lavishly endowed 
by the Government out of the proceeds of white American 
labor, use their great means to employ the scum of Asia 
in preference to our own people. If these monopolies 
finally triumph, personal liberty cannot survive. Against 
all endeavors in the Legislature to check the growth of 
their pretensions they use without scruple their main 
argument. In such cases, "Coin talks" with an eloquence 
and effect that render valueless all opposing arguments, 
no matter how forcible in logic nor how well-grounded 
in public policy they may be. The power of the corpora- 
tions, thus exerted on legislation and on the machinery 
of both parties, has grown too strong for public safety. 
It permeates everywhere. It reaches every interest in 
the community. It imperils every man's business and 
prospects. It throttles the ambition and independence of 
every citizen who dare assert his birthright of freedom 
in speech and act. It intimidates. It bribes. It subsi- 
dizes. It is destroying the honor, the manhood, the 
virtue of this Republic. It is time it were brought into 
subjection. All who value the rights of labor ; all who 
cherish personal liberty and individual independence ; all, 
in fine, who desire the perpetuation of American repub- 
licanism, according to its first principles, must unite in 
opposition to the further advance of the monopolies, and 
the Democratic party, true to its grand and eternal prin- 



12 



ciples, must unite this opposition, must defy all the hosts 
of monopoly, and all their insidious wiles. The country 
belongs to the people, and they will yet vindicate their 
right to rule it. 



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